Critical Contrast: Capstar Financial (NASDAQ:CSTR) & TriCo Bancshares (NASDAQ:TCBK)

Capstar Financial (NASDAQ:CSTR) and TriCo Bancshares (NASDAQ:TCBK) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, risk, profitability, analyst recommendations and earnings.

Earnings & Valuation

This table compares Capstar Financial and TriCo Bancshares’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Capstar Financial $83.24 million 3.33 $9.65 million $1.19 13.18
TriCo Bancshares $277.50 million 4.19 $68.32 million $2.69 14.18

TriCo Bancshares has higher revenue and earnings than Capstar Financial. Capstar Financial is trading at a lower price-to-earnings ratio than TriCo Bancshares, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

28.5% of Capstar Financial shares are held by institutional investors. Comparatively, 61.5% of TriCo Bancshares shares are held by institutional investors. 13.6% of Capstar Financial shares are held by insiders. Comparatively, 10.3% of TriCo Bancshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Capstar Financial pays an annual dividend of $0.20 per share and has a dividend yield of 1.3%. TriCo Bancshares pays an annual dividend of $0.76 per share and has a dividend yield of 2.0%. Capstar Financial pays out 16.8% of its earnings in the form of a dividend. TriCo Bancshares pays out 28.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. TriCo Bancshares has raised its dividend for 5 consecutive years. TriCo Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Capstar Financial and TriCo Bancshares, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capstar Financial 1 1 2 0 2.25
TriCo Bancshares 0 0 1 0 3.00

Capstar Financial presently has a consensus price target of $17.50, suggesting a potential upside of 11.54%. TriCo Bancshares has a consensus price target of $45.00, suggesting a potential upside of 17.96%. Given TriCo Bancshares’ stronger consensus rating and higher possible upside, analysts plainly believe TriCo Bancshares is more favorable than Capstar Financial.

Profitability

This table compares Capstar Financial and TriCo Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capstar Financial 11.94% 9.39% 1.13%
TriCo Bancshares 25.94% 10.37% 1.29%

Risk and Volatility

Capstar Financial has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500. Comparatively, TriCo Bancshares has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.

Summary

TriCo Bancshares beats Capstar Financial on 13 of the 17 factors compared between the two stocks.

About Capstar Financial

CapStar Financial Holdings, Inc. operates as the bank holding company for CapStar Bank that provides banking services to consumer and corporate customers located primarily in Tennessee, the United States. It offers a range of deposit products and services, including demand deposits, interest-bearing transaction accounts, money market accounts, time and savings deposits, certificates of deposit, and CDARS reciprocal products. The company also provides commercial and consumer real estate, construction and land development, commercial and industrial, consumer, and other loans. In addition, it offers private banking and wealth management services for the owners and operators of business clients and other high net worth individuals; and correspondent banking services to community banks. Further, the company provides telephone and online banking, direct deposit, mobile banking, safe deposit boxes, remote deposit, and cash management services for individuals, and small and medium sized businesses. CapStar Financial Holdings, Inc. was founded in 2007 and is headquartered in Nashville, Tennessee.

About TriCo Bancshares

TriCo Bancshares operates as a bank holding company for Tri Counties Bank that provides commercial banking services to individual and corporate customers. It accepts demand, savings, and money market accounts, as well as time deposits. It also provides small business loans; real estate mortgage loans, such as residential and commercial loans; consumer loans; commercial loans, including agricultural loans; and real estate construction loans. In addition, the company offers treasury management services; and other customary banking services, including safe deposit boxes. Further, it provides independent financial and broker-dealer services. The company operates 69 traditional branches, 9 in-store branches, and 2 loan production offices in northern and central California. TriCo Bancshares was incorporated in 1974 and is headquartered in Chico, California.

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